HPCL net plummets to Rs 147 cr on rising costs
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Hindustan Petroleum Corp's (HPCL) quarterly profit plunged to Rs 147 crore, from Rs 2,725.18 crore in the same quarter last year, as the state oil refiner faced rising costs and received lower government compensation for selling products at a discount.
Total costs increased 18 per cent to Rs 52,858 crore for the quarter, offsetting a 11 per cent rise in total operating income to Rs 53,424 crore. High crude oil prices, ageing facilities and weakness in the rupee have been squeezing gross refining margins (GRM) at state oil refiners.
State-run refiners, such as HPCL, Bharat Petroleum and IOC, have a lower capacity to process cheaper heavy crude than private players Reliance Industries and Essar Oil, which recently reported healthy Q3 margins. Over the first nine months of the year, HPCL averaged a GRM of $1.46, translating to a GRM of $3.19 in the quarter. In contrast, RIL reported a GRM of $9.60, while Essar Oil's GRM came in at $9.75. HPCL is looking to expand its Mumbai and Vishakapatnam refineries, and increase their complexity, in order to help improve margins. It also has plans to set up a new refinery project in Ratnagiri, Maharashtra.
HPCL received compensation of Rs 5,538 crore from the government to help cover under-recoveries, while discounts on crude oil purchased from upstream oil companies amounted to Rs 2,715 crore in the quarter.
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